Raytheon wins bid for Hughes

In what could be the last of the mega-deals in the post-Cold War consolidation of America's defence industry, Raytheon last night emerged as the winning bidder for the defence businesses of Hughes Electronics.

General Motors, the parent of Hughes Electronics, accepted Raytheon's bid, worth $9.5bn (pounds 5.7bn), at a board meeting in New York. Raytheon's victory will propel it into the number three position among US defence contractors after Boeing and Lockheed Martin.

The announcement meant defeat for Northrop Grumman, the maker of the B-2 bomber, which had also joined the bidding contest. In the long term, the company may be forced into alliances of its own to survive, analysts say.

The takeover of the Hughes defence businesses will act as another spur to the restructuring of the European defence industry, which is well behind the pace set by leading contractors in the US. Last autumn Dick Evans, chief executive of British Aerospace, predicted the European industry would ultimately consolidate into a small core of big players, but said the process had become bogged down in national politics.

BAe's vision is of a single European holding company encompassing everything from missile technology and military jets to civil aircraft. Some progress has been made with the merger of BAe's missiles business with Matra of France and the ongoing merger of Dassault with Aerospatiale.

Raytheon is believed to have bolstered its position in the race for Hughes by its purchase earlier this month of the defence electronics component of Texas Instruments for about $3bn. The move created a better match between Raytheon and the Hughes businesses.

Raytheon hopes to close the deal within six months. The company is offering $5.1bn in stock and will assume $4.4bn in Hughes debt. The transaction will be submitted to approval votes among GM and Raytheon shareholders.

Raytheon said the combined company would have annual revenues of close to $21bn and a workforce of 127,000.

Any unfair competition issues that may be raised by US regulators would almost certainly focus on the missiles sector; Raytheon and Hughes Electronics have large missile businesses. As well as producing small aircraft and other defence products, Raytheon also has an important engineering consultancy division.

The Hughes sale will allow General Motors to concentrate on its core business of car-making. The remaining parts of Hughes, which General Motors may or may not choose to hold on to, will be focused on satellite communications and broadcasting.

PROMOTED VIDEO
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

BA/PM,EMIR/Dodd-Frank,London,£450-650P/D

£450 - £650 per day + competitive: Orgtel: My client, a leading bank, is curre...

Senior Analyst - ALM Data - Banking - Halifax

£350 - £400 per day + competitive: Orgtel: Senior Analyst, ALM Data, Halifax, ...

Java developer - Banking - London - Up to £600/day

£500 - £600 per day: Orgtel: Java developer - Banking - London - Up to £600/d...

Liquidity Reporting-Basel III-LCR-Bank-£400/day

£400 per day + competitive: Orgtel: Liquidity Reporting - Basel III - LCR - Ba...

Day In a Page

Save the tiger: The animals bred for bones on China’s tiger farms

The animals bred for bones on China’s tiger farms

The big cats kept in captivity to perform for paying audiences and then, when dead, their bodies used to fortify wine
A former custard factory, a Midlands bog and a Leeds cemetery all included in top 50 hidden spots in the UK

A former custard factory, a Midlands bog and a Leeds cemetery

Introducing the top 50 hidden spots in Britain
Ebola epidemic: Plagued by fear

Ebola epidemic: Plagued by fear

How a disease that has claimed fewer than 2,000 victims in its history has earned a place in the darkest corner of the public's imagination
Chris Pratt: From 'Parks and Recreation' to 'Guardians of the Galaxy'

From 'Parks and Recreation' to 'Guardians of the Galaxy'

He was homeless in Hawaii when he got his big break. Now the comic actor Chris Pratt is Hollywood's new favourite action star
How live cinema screenings can boost arts audiences

How live cinema screenings can boost arts audiences

Broadcasting plays and exhibitions to cinemas is a sure-fire box office smash
Shipping container hotels: Pop-up hotels filling a niche

Pop-up hotels filling a niche

Spending the night in a shipping container doesn't sound appealing, but these mobile crash pads are popping up at the summer's biggest events
Native American headdresses are not fashion accessories

Feather dust-up

A Canadian festival has banned Native American headwear. Haven't we been here before?
Boris Johnson's war on diesel

Boris Johnson's war on diesel

11m cars here run on diesel. It's seen as a greener alternative to unleaded petrol. So why is London's mayor on a crusade against the black pump?
5 best waterproof cameras

Splash and flash: 5 best waterproof cameras

Don't let water stop you taking snaps with one of these machines that will take you from the sand to meters deep
Louis van Gaal interview: Manchester United manager discusses tactics and rebuilding after the David Moyes era

Louis van Gaal interview

Manchester United manager discusses tactics and rebuilding after the David Moyes era
Will Gore: The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series

Will Gore: Outside Edge

The goodwill shown by fans towards Alastair Cook will evaporate rapidly if India win the series
The children were playing in the street with toy guns. The air strikes were tragically real

The air strikes were tragically real

The children were playing in the street with toy guns
Boozy, ignorant, intolerant, but very polite – The British, as others see us

Britain as others see us

Boozy, ignorant, intolerant, but very polite
How did our legends really begin?

How did our legends really begin?

Applying the theory of evolution to the world's many mythologies
Watch out: Lambrusco is back on the menu

Lambrusco is back on the menu

Naff Seventies corner-shop staple is this year's Aperol Spritz